Correlation Between DKIEUHUAKLDKK and Sparinvest Europa

Can any of the company-specific risk be diversified away by investing in both DKIEUHUAKLDKK and Sparinvest Europa at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining DKIEUHUAKLDKK and Sparinvest Europa into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Investeringsforeningen Danske Invest and Sparinvest Europa Growth, you can compare the effects of market volatilities on DKIEUHUAKLDKK and Sparinvest Europa and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in DKIEUHUAKLDKK with a short position of Sparinvest Europa. Check out your portfolio center. Please also check ongoing floating volatility patterns of DKIEUHUAKLDKK and Sparinvest Europa.

Diversification Opportunities for DKIEUHUAKLDKK and Sparinvest Europa

0.87

Correlation Coefficient

DKIEUHUAKLDKK  Sparinvest Europa

Very poor diversification

The 3 months correlation between DKIEUHUAKLDKK and Sparinvest is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Investeringsforeningen Danske and Sparinvest Europa Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparinvest Europa Growth and DKIEUHUAKLDKK is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Investeringsforeningen Danske Invest are associated (or correlated) with Sparinvest Europa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparinvest Europa Growth has no effect on the direction of DKIEUHUAKLDKK i.e., DKIEUHUAKLDKK and Sparinvest Europa go up and down completely randomly.

Pair Corralation between DKIEUHUAKLDKK and Sparinvest Europa

Assuming the 90 days trading horizon Investeringsforeningen Danske Invest is expected to under-perform the Sparinvest Europa. But the fund apears to be less risky and, when comparing its historical volatility, Investeringsforeningen Danske Invest is 1.41 times less risky than Sparinvest Europa. The fund trades about -0.04 of its potential returns per unit of risk. The Sparinvest Europa Growth is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  16,389  in Sparinvest Europa Growth on September 4, 2024 and sell it today you would lose (212.00) from holding Sparinvest Europa Growth or give up 1.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Investeringsforeningen Danske   vs.  Sparinvest Europa Growth

Investeringsforeningen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Investeringsforeningen Danske Invest has generated negative risk-adjusted returns adding no value to fund investors. In spite of comparatively stable essential indicators, DKIEUHUAKLDKK is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Sparinvest Europa Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sparinvest Europa Growth has generated negative risk-adjusted returns adding no value to fund investors. Despite quite persistent basic indicators, Sparinvest Europa is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with DKIEUHUAKLDKK and Sparinvest Europa

The main advantage of trading using opposite DKIEUHUAKLDKK and Sparinvest Europa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DKIEUHUAKLDKK position performs unexpectedly, Sparinvest Europa can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Sparinvest Europa will offset losses from the drop in Sparinvest Europa's long position.

The idea behind Investeringsforeningen Danske Invest and Sparinvest Europa Growth pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.